GOP, Dems clash over Obama tax boosts on wealthy

FILE - In this Feb. 16, 2012, file photo Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., left, reaches across the table to shake hands with Rep. Fred Upton, R-Mich., after bi-partisan House and Senate conferees signed a compromise agreement on the payroll tax cut extension. Democrats and Republicans are forcing votes in Congress this week in April 2012 on competing tax plans that they know are doomed from the start. But little does that matter to either party. (AP Photo/J. Scott Applewhite, File)
— AP

FILE - In this Feb. 16, 2012, file photo Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., left, reaches across the table to shake hands with Rep. Fred Upton, R-Mich., after bi-partisan House and Senate conferees signed a compromise agreement on the payroll tax cut extension. Democrats and Republicans are forcing votes in Congress this week in April 2012 on competing tax plans that they know are doomed from the start. But little does that matter to either party. (AP Photo/J. Scott Applewhite, File)
/ AP

"The administration believes that continuing to allow some of the wealthiest Americans to use special tax breaks to avoid paying their fair share simply cannot be justified," the White House said in a written statement.

Obama's tax return shows he earned nearly $790,000 last year and paid an effective tax rate of almost 21 percent.

Republicans said the bill underscored an effort by Obama and Democrats to scapegoat the wealthy with a gimmick that would accomplish nothing.

Sen. Rob Portman, R-Ohio, called the measure a proposal "that no one can credibly argue will create a single job."

On average, the wealthy already pay higher income tax rates than those who make less.

People making $1 million or more annually paid an average effective rate of 25 percent last year in federal income and payroll taxes that finance Social Security and Medicare, according to the nonpartisan Tax Policy Center, a Washington group that studies taxes. Those earning $50,000 to $75,000 paid an average effective rate of 12 percent, the group said.

The White House complaint was that even so, some millionaires end up paying lower rates than many of those earning less. That is largely because many wealthy people earn income from dividends that are taxed at just 15 percent, instead of the top 35 percent rate on salaries.

A report last October by the Congressional Research Service, an agency that conducts research for lawmakers, said about a quarter of those earning $1 million or more per year - 94,500 taxpayers - had a lower tax rate than 10.4 million moderate-income people.